Brantano’s plunge into administration may not have surprised the industry but it can’t be ignored: it’s symptomatic of much wider problems.
When Brantano went into administration last month it had a multitude of problems at its door.
Commentators have suggested that tired fascias and a bland product range, as well as branded goods that could be bought elsewhere, were among its issues.
While footwear retailers such as Office and Kurt Geiger continue to trade strongly despite changing hands in recent years, value footwear has suffered a well-documented struggle with chains Barratts and Faith both collapsing into administration.
Shoezone also closed 90 of its Stead and Simpson stores in late 2012.
The difference in footwear retailers’ fortunes are stark. In Kurt Geiger’s last full year pre-tax profits surged 242% as sales jumped 15.4% to £251.8m. Office also did well, reporting a doubling of full-year pre-tax profits and a 5.5% rise in sales.
“Kurt Geiger and Office both have very strong branded offerings,” says Retail Remedy senior consultant Paul Thomas.
“Office has really capitalised on the trainer trend, while Kurt Geiger has an incredibly strong own-brand proposition with Carvela, Kurt Geiger and KG.”
“The customer experience at Brantano really deteriorated over the last couple of years. Perhaps they went too far when it came to cutting costs and that’s how they lost customers”
Paul Thomas, Retail Remedy
On the other hand, Shoe Zone’s full-year profits fell 3.4% to £10.1m in its last full-year as sales slipped 3.5%.
Brantano itself reported a pre-tax loss of £4.6m in the year ending December 31, 2014, despite sales rising 6% to £100.7m.
“The customer experience at Brantano really deteriorated over the last couple of years,” according to Thomas.
“It used to be quick and convenient but they didn’t do what they needed to when it came to store housekeeping. Perhaps they went too far when it came to cutting costs and that’s how they lost customers.
“Obviously they are a more value-based offering than retailers like Office or Kurt Geiger but the customer experience still needs to be good.”
High street competition
However some specialists have faced pressure as large retailers have moved into the footwear space.
“There is very little reason to go into a specialist footwear store. They have not been able to bring the footfall in”
Nivindya Sharma, Verdict
“In places like H&M and New Look, you can go and buy nice shoes really easily,” says Verdict analyst Nivindya Sharma. “If you want a more high-end proposition you can go to John Lewis or Debenhams. There is very little reason to go into a specialist footwear store. They have not been able to bring the footfall in.”
Brantano lacked both brand appeal and convenience. Its shoppers came from an older demographic and while they might not be picking up shoes while shopping at H&M, they can easily do so in M&S or another high street retailer.
The grocers have been blamed for many retailers’ ills and Brantano is no exception.
“They have played a part in Brantano’s downfall in the crucial 2010-2015 period,” Sharma says. “They used economic circumstances people were in to grow clothing and footwear.”
Whether the grocers will continue to take market share from clothing and footwear retailers is doubtful.
Sharma adds: “Supermarkets want to focus on their core: food. They are not investing in clothing and footwear at the moment, they will remain static.”
One clothing retailer said he would be shocked if Brantano was purchased as a whole. Brantano’s store estate numbers 150 units. The vast majority – 131 - are on retail parks.
Six are in shopping centres and just four are on a high street. According to data from the Local Data Company, the average Brantano unit racks up a health index score of six out of a possible nine points.
The index measures factors such as population density and vacancy rates to pinpoint the desirability of a location. Brantano’s store estate is the same as the national average, though individual units’ health ranges from two to eight.
Fellow value footwear retailer Shoe Zone, which unveiled its plans for big-box stores, may be tempted by some of Brantano’s retail estate.
However Brantano stores tend to be very large, and this may discourage Shoe Zone.
Other potential occupiers run the gamut from Sports Direct to Maplin, according to the Local Data Company (LDC).
The LDC identified 10 retailers as likely buyers: Bargain Buys, B&M Bargains, B&M Homestore, Dunelm, Home Bargains, Maplin, Poundland, Pets at Home, Smyths Toys, Sports Direct and Tapi Carpets and Floors.
It named these retailers on the basis that they are increasing their store numbers significantly, have similar floorspace requirements to Brantano stores and a large share of their existing estate is on retail parks.
Sharma believes it is unlikely that any potential buyer would buy the Brantano brand as it currently stands.
“When the acquisition happened there was hope that the brand might be revitalised,” she says.
“Clearly Alteri has decided it wasn’t worth the upgrade. It obviously wanted to cut its losses. There was no USP left for Brantano. It was an irrelevant proposition.”